Your NRO account is paying ~31% tax. The India-UAE treaty caps it at 12.5%.

The India-UAE DTAA halves the withholding rate on NRO interest and dividends. ITR deadline to reclaim FY2025-26 excess is July 31. Here's the exact process, the break-even, and the Form 10F vs Form 41 transition that's tripping people up.

If you have an NRO fixed deposit in India, look at the last interest credit. Your bank almost certainly deducted about 31% of it in tax — 30% under the Income Tax Act, plus a 4% health and education cess.

You may not owe that much. The India-UAE Double Taxation Avoidance Agreement caps the withholding rate on interest income at 12.5%, flat, no cess on top. The gap — roughly 18 percentage points — sits there year after year until you claim it.

The window to recover last year’s excess closes July 31.

What the treaty says

India has DTAAs with over 90 countries. The India-UAE version (in force since 1993) sets the maximum withholding rates on:

Interest income (NRO deposits, savings, bonds): 12.5%
Dividends from Indian companies: 10%

Compare those to the Indian domestic defaults for NRIs — about 31% on interest, 20% on dividends.

Two things the treaty does not change: NRE account interest is already tax-free in India, regardless of the treaty. Capital gains from Indian equity (long-term: 12.5% on gains above ₹1.25 lakh per year; short-term: 20%) are not reduced by the treaty, because the UAE has no capital gains tax, so there is no double-taxation to eliminate.

The DTAA saving applies only to NRO income: interest on NRO deposits and savings accounts, and dividends from Indian stocks credited to an NRO-linked demat account.

The numbers on a real account

SBI’s NRO fixed deposit rate for a 1-year term (effective April 1, 2026) is 7.25% per annum. Here’s what that produces on ₹10 lakh (roughly AED 43,000):

	Figure
Interest earned	₹72,500
TDS at 31.2% (no DTAA)	₹22,620
TDS at 12.5% (DTAA claimed)	₹9,063
Annual saving	₹13,557 ≈ AED 523

On ₹50 lakh in NRO deposits, the saving is roughly ₹67,800/yr (≈ AED 2,620).

Is the TRC worth the effort?

To claim the treaty rate, you need a UAE Tax Residency Certificate (TRC) from the Federal Tax Authority. For a salaried individual without a UAE corporate tax TRN, the cost is AED 1,050 per year (AED 50 application fee + AED 1,000 issuance fee). Processing runs about 4–5 days.

At the saving rate above, the TRC cost pays back once your NRO balance exceeds roughly ₹20 lakh. If you also hold Indian dividend-paying stocks — where the treaty rate is 10% instead of 20% — the break-even falls further.

How to claim it going forward

Step 1 — Get the UAE TRC. Apply online at the UAE FTA portal. Required documents for most salaried employees: passport copy, entry/exit history from UAE immigration (ICP or GDRFA), proof of UAE accommodation (Ejari-registered tenancy or property title deed), salary certificate.

Step 2 — File Form 41. Under the new Income Tax Act 2025 (effective April 1, 2026), the DTAA self-declaration form was renamed from Form 10F to Form 41 (Section 159(8), Rule 75 of Income-tax Rules 2026). Log into incometax.gov.in → e-file → Income Tax Forms → Form 41, enter your UAE address and TRC validity period.

Step 3 — Notify every payer. Submit the TRC and filed Form 41 acknowledgment to: your NRO bank, your demat broker, and any dividend registrar (CAMS or KFintech for mutual funds; the company’s own registrar for direct stock dividends). Once on file, they deduct at the treaty rate for the full year.

The July 31 refund window — FY2025-26

If FY2025-26 (April 2025–March 2026) has closed and your bank deducted TDS at the higher domestic rate all year, the only way to recover the excess is to file your Income Tax Return before July 31, 2026.

One thing tripping people up right now: for FY2025-26, the ITR still uses Form 10F, not Form 41. The old Income Tax Act 1961 governed that year. The switch to Form 41 applies to ongoing bank TDS from FY2026-27 onwards.

File ITR-2 (for most NRIs without business income), declare the lower treaty rate on NRO interest and dividends, and the Income Tax Department refunds the excess. Filing before July 31 costs nothing. Filing a belated return from August 1 onwards attracts a fee of ₹5,000.

Annual upkeep

The TRC is issued per tax year and must be renewed. Form 41 is also filed annually. The habit: each April, get TRC from FTA, file Form 41, notify banks and brokers. The first year involves some friction. After that it’s a 30-minute task that saves a meaningful sum every year.

The treaty has been in place since 1993. The process to claim it takes two weeks.

SBI NRO FD rate and UAE FTA fees are current as of July 2026 and will move — recheck both before acting. INR/AED used at ₹25.9/AED.